##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2007



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
|- | -----------------------------------------------------------------------------

For the transition period from              to

Commission File No. 000-31711



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BOE FINANCIAL SERVICES OF VIRGINIA, INC.

(Exact name of registrant as specified in its charter)



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|                                                              |  |                                 
|------------------------------------------------------------- |  | --------------------------------
|Virginia                                                      |  | 54-1980794                      
|(State or other jurisdiction ofincorporation or organization) |  | (IRS EmployerIdentification No.)



|                                             |  |           
|-------------------------------------------- |  | ----------
|1325 Tappahannock Boulevard,Tappahannock, VA |  | 22560     
|(Address of principal executive offices)     |  | (Zip Code)

(804) 443-4343

(Registrants telephone number, including area code)



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Indicate by check mark whether the registrant (1)filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act.

Large accelerated file ̈Accelerated filer ̈Non-accelerated
filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act.)    Yes ̈No  x

State the number of shares outstanding of each of the issuers classes of common equity as of August 9, 2007.



|                              |  |                              
|----------------------------- |  | -----------------------------
|Class                         |  | Outstanding at August 9, 2007
|Common Stock, $5.00 par value |  | 1,210,179                    



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##### Table of Contents

BOE Financial Services of Virginia, Inc.

FORM 10-Q

INDEX

PART I - FINANCIAL INFORMATION



|                                                                                                  |  |                                                                                       |  |      
|------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------- |  | -----
|                                                                                                  |  |                                                                                       |  | Page 
|Item 1.                                                                                           |  | Financial Statements                                                                  |  | 1-5  
|                                                                                                  | 
|Consolidated Balance SheetsJune 30, 2007 and December 31, 2006                                    |  | 1                                                                                    
|                                                                                                  | 
|Consolidated Statements of IncomeThree months ended June 30, 2007 and 2006                        |  | 2                                                                                    
|                                                                                                  | 
|Consolidated Statements of IncomeSix months ended June 30, 2007 and 2006                          |  | 3                                                                                    
|                                                                                                  | 
|Consolidated Statements of Cash FlowsSix months ended June 30, 2007 and 2006                      |  | 4                                                                                    
|                                                                                                  | 
|Consolidated Statements of Changes in Stockholders EquitySix months ended June 30, 2007 and 2006 |  | 5                                                                                    
|                                                                                                  | 
|Notes to Consolidated Financial Statements                                                        |  | 6-9                                                                                  
|                                                                                                  |  |                                                                                      
|Item 2.                                                                                           |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 10-14
|                                                                                                  |  |                                                                                      
|Item 3.                                                                                           |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 15-16
|                                                                                                  |  |                                                                                      
|Item 4.                                                                                           |  | Controls and Procedures                                                               |  | 16   
|                                                                                                  | 
|PART II - OTHER INFORMATION                                                                       |  |                                                                                      
|                                                                                                  |  |                                                                                      
|Item 1.                                                                                           |  | Legal Proceedings                                                                     |  | 17   
|                                                                                                  | 
|Item 1A.
Risk Factors                                                                             |  | 17                                                                                   
|                                                                                                  |  |                                                                                      
|Item 2.                                                                                           |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 17   
|                                                                                                  |  |                                                                                      
|Item 3.                                                                                           |  | Defaults Upon Senior Securities                                                       |  | 17   
|                                                                                                  |  |                                                                                      
|Item 4.                                                                                           |  | Submission of Matters to a Vote of Security Holders                                   |  | 17   
|                                                                                                  |  |                                                                                      
|Item 5.                                                                                           |  | Other Information                                                                     |  | 17   
|                                                                                                  |  |                                                                                      
|Item 6.                                                                                           |  | Exhibits                                                                              |  | 18   
|                                                                                                  | 
|Signatures                                                                                        |  | 19                                                                                   



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##### Table of Contents

PART I  FINANCIAL INFORMATION



|Item 1.     | FINANCIAL STATEMENTS
|------------ | --------------------

BOE FINANCIAL SERVICES OF VIRGINIA, INC.

Consolidated Balance Sheets

(in Thousands except share data)



|                                                                           |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|-------------------------------------------------------------------------- |  | ---------- |  | ---------- |  |  |  |  |  | ----------- | ------- | - | ------------ | - | ------- | -
|                                                                           |  |            |  |            |  |  |  |  |  | June 30,    |         |   | December 31, |  
|                                                                           |  |            |  |            |  |  |  |  |  | 2007        |         |   | 2006         |  
|                                                                           |  |            |  |            |  |  |  |  |  | (Unaudited) |         |   |              |  
|ASSETS                                                                     |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|Cash and due from banks                                                    |  |            |  |            |  |  |  |  |  | $           | 3,249   |   |              | $ | 5,520   |  
|Federal funds sold                                                         |  |            |  |            |  |  |  |  |  |             | 258     |   |              |   | 0       |  
|Securities available for sale, at fair value                               |  |            |  |            |  |  |  |  |  |             | 50,681  |   |              |   | 55,963  |  
|Securities held to maturity (fair value $2,888 in 2007 and $2,949 in 2006) |  |            |  |            |  |  |  |  |  |             | 3,000   |   |              |   | 3,000   |  
|Equity Securities, restricted, at cost                                     |  |            |  |            |  |  |  |  |  |             | 1,761   |   |              |   | 1,553   |  
|Loans held for resale                                                      |  |            |  |            |  |  |  |  |  |             | 644     |   |              |   | 0       |  
|Loans                                                                      |  |            |  |            |  |  |  |  |  |             | 206,438 |   |              |   | 196,891 |  
|Less: Allowance for loan losses                                            |  |            |  |            |  |  |  |  |  |             | (2,362  | ) |              |   | (2,400  | )
|                                                                           |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|Net loans                                                                  |  |            |  |            |  |  |  |  |  |             | 204,076 |   |              |   | 194,491 |  
|                                                                           |  |            |  |            |  | 
|Bank premises and equipment, net                                           |  |            |  |            |  |  |  |  |  |             | 10,226  |   |              |   | 10,454  |  
|Accrued interest receivable                                                |  |            |  |            |  |  |  |  |  |             | 1,435   |   |              |   | 1,363   |  
|Intangible assets, net                                                     |  |            |  |            |  |  |  |  |  |             | 461     |   |              |   | 524     |  
|Other assets                                                               |  |            |  |            |  |  |  |  |  |             | 8,913   |   |              |   | 8,510   |  
|                                                                           |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|Total assets                                                               |  |            |  |            |  |  |  |  |  | $           | 284,704 |   |              | $ | 281,378 |  
|                                                                           |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|LIABILITIES                                                                |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|Deposits                                                                   |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|Noninterest bearing deposits                                               |  |            |  |            |  |  |  |  |  | $           | 29,536  |   |              | $ | 27,809  |  
|Interest bearing deposits                                                  |  |            |  |            |  |  |  |  |  |             | 202,720 |   |              |   | 203,056 |  
|                                                                           |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|Total deposits                                                             |  |            |  |            |  |  |  |  |  |             | 232,256 |   |              |   | 230,865 |  
|                                                                           |  |            |  |            |  | 
|Federal funds purchased                                                    |  |            |  |            |  |  |  |  |  |             |        |   |              |   | 3,207   |  
|Federal Home Loan Bank advances                                            |  |            |  |            |  |  |  |  |  |             | 17,000  |   |              |   | 12,000  |  
|Accrued interest payable                                                   |  |            |  |            |  |  |  |  |  |             | 985     |   |              |   | 851     |  
|Other liabilities                                                          |  |            |  |            |  |  |  |  |  |             | 1,867   |   |              |   | 2,284   |  
|Trust preferred capital notes                                              |  |            |  |            |  |  |  |  |  |             | 4,124   |   |              |   | 4,124   |  
|                                                                           |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|Total liabilities                                                          |  |            |  |            |  |  |  |  |  |             | 256,232 |   |              |   | 253,331 |  
|                                                                           |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|Commitments and Contingent Liabilities                                     |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|STOCKHOLDERS EQUITY                                                       |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|Common stock, $5.00 par value                                              |  |            |  |            |  |  |  |  |  |             | 6,051   |   |              |   | 6,041   |  
|                                                                           |  |            |  |            |  | 
|                                                                           |  | 6/30/07    |  | 12/31/06   |  |  |  |  |  |             |         |   |              |  
|Shares authorized                                                          |  | 10,000,000 |  | 10,000,000 |  |  |  |  |  |             |         |   |              |   |         |  
|Shares outstanding                                                         |  | 1,210,198  |  | 1,208,109  |  |  |  |  |  |             |         |   |              |   |         |  
|Paid in capital                                                            |  |            |  |            |  |  |  |  |  |             | 5,529   |   |              |   | 5,477   |  
|Accumulated other comprehensive (loss), net                                |  |            |  |            |  |  |  |  |  |             | (1,265  | ) |              |   | (727    | )
|Retained earnings                                                          |  |            |  |            |  |  |  |  |  |             | 18,157  |   |              |   | 17,256  |  
|                                                                           |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|Total stockholders' equity                                                 |  |            |  |            |  |  |  |  |  |             | 28,472  |   |              |   | 28,047  |  
|                                                                           |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  
|Total liabilities and stockholders equity                                 |  |            |  |            |  |  |  |  |  | $           | 284,704 |   |              | $ | 281,378 |  
|                                                                           |  |            |  |            |  |  |  |  |  |             |         |   |              |   |         |  

See accompanying notes to consolidated financial statements.



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##### Table of Contents

BOE FINANCIAL SERVICES OF VIRGINIA, INC.

Consolidated Statements of Income

(In Thousands except per share data)

|                                                                       |  |                    |       |   |          |   |      
|---------------------------------------------------------------------- |  | ------------------ | ----- | - | -------- | - | -----
|                                                                       |  | Three Months Ended
|                                                                       |  | June 30,           |       |   | June 30,
|                                                                       |  | 2007               |       |   | 2006    
|                                                                       |  | (Unaudited)       
|Interest Income                                                        |  |                    |      
|Interest and fees on loans                                             |  | $                  | 4,115 |   |          | $ | 3,639
|Interest on federal funds sold                                         |  |                    | 8     |   |          |   | 10   
|Interest on taxable securities                                         |  |                    | 237   |   |          |   | 226  
|Interest on tax exempt obligations of state and political subdivisions |  |                    | 337   |   |          |   | 339  
|Other interest income                                                  |  |                    | 1     |   |          |   | 2    
|                                                                       |  |                    |       |   |          |   |      
|Total interest income                                                  |  |                    | 4,698 |   |          |   | 4,216
|                                                                       |  |                    |       |   |          |   |      
|Interest Expense                                                       |  |                    |      
|Interest on savings and interest bearing deposits                      |  |                    | 192   |   |          |   | 100  
|Interest on certificates of deposit                                    |  |                    | 1,659 |   |          |   | 1,320
|Interest on federal funds purchased                                    |  |                    | 13    |   |          |   | 25   
|Interest on trust preferred capital notes                              |  |                    | 87    |   |          |   | 83   
|Interest on other borrowed money                                       |  |                    | 177   |   |          |   | 135  
|                                                                       |  |                    |       |   |          |   |      
|Total interest expense                                                 |  |                    | 2,128 |   |          |   | 1,663
|                                                                       |  |                    |       |   |          |   |      
|Net interest income                                                    |  |                    | 2,570 |   |          |   | 2,553
|Provision for loan losses                                              |  |                    |      |   |          |   | 25   
|                                                                       |  |                    |       |   |          |   |      
|Net interest income after provision for loan losses                    |  |                    | 2,570 |   |          |   | 2,528
|                                                                       |  |                    |       |   |          |   |      
|Noninterest Income                                                     |  |                    |       |   |          |   |      
|Service charges on deposit accounts                                    |  |                    | 278   |   |          |   | 274  
|Securities gains/(losses)-net                                          |  |                    | (3    | ) |          |   | 2    
|Gains on sale of loans                                                 |  |                    | 3     |   |          |   | 26   
|Other fee income                                                       |  |                    | 62    |   |          |   | 56   
|All other noninterest income                                           |  |                    | 219   |   |          |   | 119  
|                                                                       |  |                    |       |   |          |   |      
|Total noninterest income                                               |  |                    | 559   |   |          |   | 477  
|                                                                       |  |                    |       |   |          |   |      
|Noninterest Expense                                                    |  |                    |       |   |          |   |      
|Salaries and employee benefits                                         |  |                    | 1,216 |   |          |   | 1,107
|Premises and fixed assets                                              |  |                    | 297   |   |          |   | 270  
|Other expenses                                                         |  |                    | 643   |   |          |   | 651  
|                                                                       |  |                    |       |   |          |   |      
|Total noninterest expense                                              |  |                    | 2,156 |   |          |   | 2,028
|                                                                       |  |                    |       |   |          |   |      
|Income before income taxes                                             |  |                    | 973   |   |          |   | 977  
|Income taxes                                                           |  |                    | 153   |   |          |   | 211  
|                                                                       |  |                    |       |   |          |   |      
|Net income                                                             |  | $                  | 820   |   |          | $ | 766  
|                                                                       |  |                    |       |   |          |   |      
|Earnings per share, basic                                              |  | $                  | 0.68  |   |          | $ | 0.64 
|Earnings per share, diluted                                            |  | $                  | 0.67  |   |          | $ | 0.63 

See accompanying notes to consolidated financial statements.



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##### Table of Contents

BOE FINANCIAL SERVICES OF VIRGINIA, INC.

Consolidated Statements of Income

(In Thousands except per share data)



|                                                                       |  |                  |       |   |          |   |       |  
|---------------------------------------------------------------------- |  | ---------------- | ----- | - | -------- | - | ----- | -
|                                                                       |  | Six Months Ended |      
|                                                                       |  | June 30,         |       |   | June 30, |  
|                                                                       |  | 2007             |       |   | 2006     |  
|                                                                       |  | (Unaudited)      |      
|Interest Income                                                        |  |                  |       |  
|Interest and fees on loans                                             |  | $                | 7,940 |   |          | $ | 7,030 |  
|Interest on federal funds sold                                         |  |                  | 26    |   |          |   | 13    |  
|Interest on taxable securities                                         |  |                  | 493   |   |          |   | 456   |  
|Interest on tax exempt obligations of state and political subdivisions |  |                  | 688   |   |          |   | 676   |  
|Other interest income                                                  |  |                  | 8     |   |          |   | 6     |  
|                                                                       |  |                  |       |   |          |   |       |  
|Total interest income                                                  |  |                  | 9,155 |   |          |   | 8,181 |  
|                                                                       |  |                  |       |   |          |   |       |  
|Interest Expense                                                       |  |                  |       |   |          |   |       |  
|Interest on savings and interest bearing deposits                      |  |                  | 367   |   |          |   | 201   |  
|Interest on certificates of deposit                                    |  |                  | 3,303 |   |          |   | 2,475 |  
|Interest on federal funds purchased                                    |  |                  | 25    |   |          |   | 87    |  
|Interest on trust preferred capital notes                              |  |                  | 173   |   |          |   | 161   |  
|Interest on other borrowed money                                       |  |                  | 360   |   |          |   | 205   |  
|                                                                       |  |                  |       |   |          |   |       |  
|Total interest expense                                                 |  |                  | 4,228 |   |          |   | 3,129 |  
|                                                                       |  |                  |       |   |          |   |       |  
|Net interest income                                                    |  |                  | 4,927 |   |          |   | 5,052 |  
|Provision for loan losses                                              |  |                  |      |   |          |   | 125   |  
|                                                                       |  |                  |       |   |          |   |       |  
|Net interest income after provision for loan losses                    |  |                  | 4,927 |   |          |   | 4,927 |  
|                                                                       |  |                  |       |   |          |   |       |  
|Noninterest Income                                                     |  |                  |       |   |          |   |       |  
|Service charges on deposit accounts                                    |  |                  | 513   |   |          |   | 522   |  
|Securities (losses)-net                                                |  |                  | (3    | ) |          |   | (19   | )
|Gains on sale of loans                                                 |  |                  | 3     |   |          |   | 33    |  
|Other fee income                                                       |  |                  | 114   |   |          |   | 99    |  
|All other noninterest income                                           |  |                  | 362   |   |          |   | 234   |  
|                                                                       |  |                  |       |   |          |   |       |  
|Total noninterest income                                               |  |                  | 989   |   |          |   | 869   |  
|                                                                       |  |                  |       |   |          |   |       |  
|Noninterest Expense                                                    |  |                  |       |   |          |   |       |  
|Salaries and employee benefits                                         |  |                  | 2,397 |   |          |   | 2,171 |  
|Premises and fixed assets                                              |  |                  | 573   |   |          |   | 487   |  
|Other expenses                                                         |  |                  | 1,274 |   |          |   | 1,197 |  
|                                                                       |  |                  |       |   |          |   |       |  
|Total noninterest expense                                              |  |                  | 4,244 |   |          |   | 3,855 |  
|                                                                       |  |                  |       |   |          |   |       |  
|Income before income taxes                                             |  |                  | 1,672 |   |          |   | 1,941 |  
|Income taxes                                                           |  |                  | 300   |   |          |   | 437   |  
|                                                                       |  |                  |       |   |          |   |       |  
|Net income                                                             |  | $                | 1,372 |   |          | $ | 1,504 |  
|                                                                       |  |                  |       |   |          |   |       |  
|Earnings per share, basic                                              |  | $                | 1.14  |   |          | $ | 1.25  |  
|Earnings per share, diluted                                            |  | $                | 1.13  |   |          | $ | 1.24  |  

See accompanying notes to consolidated financial statements.



3



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##### Table of Contents

BOE FINANCIAL SERVICES OF VIRGINIA, Inc.

Consolidated Statements of Cash Flows

(in Thousands)



|                                                                                  |  |                  |        |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ---------------- | ------ | - | ---- | - | ------- | -
|                                                                                  |  | Six Months Ended |       
|                                                                                  |  | June 30,         |       
|                                                                                  |  | 2007             |        |   | 2006 |  
|                                                                                  |  | (Unaudited)      |       
|Cash Flows from Operating Activities                                              |  |                  |        |   |      |   |         |  
|Net income                                                                        |  |                  | 1,372  |   |      | $ | 1,504   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                  |        |   |      |   |         |  
|Depreciation and amortization                                                     |  |                  | 336    |   |      |   | 275     |  
|Origination of loans held for sale                                                |  |                  | (1,896 | ) |      |   | (3,806  | )
|Proceeds from sale of loans held for sale                                         |  |                  | 1,255  |   |      |   | 3,855   |  
|Provision for loan losses                                                         |  |                  |       |   |      |   | 125     |  
|Net amortization on securities                                                    |  |                  | 74     |   |      |   | 95      |  
|Net loss on sale of securities                                                    |  |                  | 3      |   |      |   | 18      |  
|(Gain) on sale of loans                                                           |  |                  | (3     | ) |      |   | (49     | )
|(Increase) Decrease in accrued interest receivable and other assets               |  |                  | (437   | ) |      |   | 1,899   |  
|Decrease in accrued expenses and other liabilities                                |  |                  | (283   | ) |      |   | (423    | )
|                                                                                  |  |                  |        |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                  | 421    |   |      |   | 3,493   |  
|                                                                                  |  |                  |        |   |      |   |         |  
|Cash Flows from Investing Activities                                              |  |                  |        |   |      |   |         |  
|Proceeds from sale of securities available-for-sale                               |  |                  | 7,014  |   |      |   | 3,699   |  
|Proceeds from maturities and calls of securities available-for-sale               |  |                  | 4,313  |   |      |   | 1,656   |  
|Purchase of securities available for sale                                         |  |                  | (6,686 | ) |      |   | (6,327  | )
|Purchase of restricted securities                                                 |  |                  | (208   | ) |      |   | (365    | )
|Net (increase) in loans to customers                                              |  |                  | (9,585 | ) |      |   | (6,056  | )
|(Increase) in federal funds sold                                                  |  |                  | (258   | ) |      |   |        |  
|Capital expenditures                                                              |  |                  | (57    | ) |      |   | (3,157  | )
|                                                                                  |  |                  |        |   |      |   |         |  
|Net cash (used in) investing activities                                           |  |                  | (5,467 | ) |      |   | (10,550 | )
|                                                                                  |  |                  |        |   |      |   |         |  
|Cash Flows from Financing Activities                                              |  |                  |        |   |      |   |         |  
|Net increase in deposits                                                          |  |                  | 1,391  |   |      |   | 464     |  
|Increase (decrease) in federal funds purchased                                    |  |                  | (3,207 | ) |      |   | 898     |  
|Increase in Federal Home Loan Bank advances                                       |  |                  | 5,000  |   |      |   | 7,000   |  
|Issuance of Common Stock                                                          |  |                  | 62     |   |      |   | 93      |  
|Dividends paid                                                                    |  |                  | (471   | ) |      |   | (457    | )
|                                                                                  |  |                  |        |   |      |   |         |  
|Net cash provided by financing activities                                         |  |                  | 2,775  |   |      |   | 7,998   |  
|                                                                                  |  |                  |        |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                              |  |                  | (2,271 | ) |      |   | 941     |  
|Cash and Cash Equivalents                                                         |  |                  |        |   |      |   |         |  
|Beginning of period                                                               |  |                  | 5,520  |   |      |   | 7,365   |  
|                                                                                  |  |                  |        |   |      |   |         |  
|End of period                                                                     |  | $                | 3,249  |   |      | $ | 8,306   |  
|                                                                                  |  |                  |        |   |      |   |         |  
|Supplemental disclosure of cash flow information                                  |  |                  |        |   |      |   |         |  
|Cash paid during the year                                                         |  |                  |        |   |      |   |         |  
|Interest                                                                          |  | $                | 4,094  |   |      | $ | 2,966   |  
|                                                                                  |  |                  |        |   |      |   |         |  
|Income Taxes                                                                      |  | $                | 330    |   |      | $ | 525     |  
|                                                                                  |  |                  |        |   |      |   |         |  

See accompanying notes to consolidated financial statements.



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BOE Financial Services of Virginia, Inc.

Consolidated Statement of Changes in Stockholders Equity

For the Six Month Periods Ended June 30, 2007 and 2006

(in thousands)

(Unaudited)



|                                                                        |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|----------------------------------------------------------------------- |  | ----------- | ----- | ------------------------ | - | ---------------- |  | - | ------------------------------------------ | - |  | ------------------- | ------ | - | ----- | - | ----- | - |  | - | ------ | -
|                                                                        |  | CommonStock |       | AdditionalPaid-InCapital |   | RetainedEarnings |  |   | AccumulatedOtherComprehensiveIncome (Loss) |   |  | ComprehensiveIncome |        |   | Total |  
|Balance, December 31, 2005                                              |  | $           | 5,990 |                          | $ | 5,264            |  | $ | 15,060                                     |   |  | $                   | (80    | ) |       |   |       |   |  | $ | 26,234 |  
|Comprehensive Income:                                                   |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|Net income                                                              |  |             |       |                          |   |                  |  |   | 1,504                                      |   |  |                     |        |   |       | $ | 1,504 |   |  |   | 1,504  |  
|Other comprehensive loss, net of tax:                                   |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|Unrealized loss on securities available for sale, net of deferred taxes |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   | (390  | ) |  |   |        |  
|Add: Reclassification adjustment, net of tax                            |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   | 12    |   |  |   |        |  
|                                                                        |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|Other comprehensive loss, net of tax:                                   |  |             |       |                          |   |                  |  |   |                                            |   |  |                     | (378   | ) |       |   | (378  | ) |  |   | (378   | )
|                                                                        |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|Total comprehensive income                                              |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       | $ | 1,126 |   |  |   |        |  
|                                                                        |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|Cash dividends, $ 0.38                                                  |  |             |       |                          |   |                  |  |   | (457                                       | ) |  |                     |        |   |       |   |       |   |  |   | (457   | )
|Issuance of common stock                                                |  |             | 17    |                          |   | 76               |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   | 93     |  
|                                                                        |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|Balance, June 30, 2006                                                  |  | $           | 6,007 |                          | $ | 5,340            |  | $ | 16,107                                     |   |  | $                   | (458   | ) |       |   |       |   |  | $ | 26,996 |  
|                                                                        |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|                                                                        |  |             |       |                          |   |                 
|                                                                        |  | CommonStock |       | AdditionalPaid-InCapital |   | RetainedEarnings |  |   | AccumulatedOtherComprehensiveIncome        |   |  | ComprehensiveIncome |        |   | Total |  
|Balance, December 31, 2006                                              |  | $           | 6,041 |                          | $ | 5,477            |  | $ | 17,256                                     |   |  | $                   | (727   | ) |       |   |       |   |  | $ | 28,047 |  
|Comprehensive Income:                                                   |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|Net income                                                              |  |             |       |                          |   |                  |  |   | 1,372                                      |   |  |                     |        |   |       | $ | 1,372 |   |  |   | 1,372  |  
|Other comprehensive loss, net of tax:                                   |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|Unrealized loss on securities available for sale, net of deferred taxes |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   | (540  | ) |  |   |        |  
|                                                                        |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|Add: Reclassification adjustment, net of tax                            |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   | 2     |   |  |   |        |  
|                                                                        |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|Other Comprehensive loss, net of tax                                    |  |             |       |                          |   |                  |  |   |                                            |   |  |                     | (538   | ) |       |   | (538  | ) |  |   | (538   | )
|                                                                        |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|Total comprehensive income                                              |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       | $ | 834   |   |  |   |        |  
|                                                                        |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|Cash dividend, $0.39 per share                                          |  |             |       |                          |   |                  |  |   | (471                                       | ) |  |                     |        |   |       |   |       |   |  |   | (471   | )
|Issuance of common stock                                                |  |             | 10    |                          |   | 52               |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   | 62     |  
|                                                                        |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  
|Balance, June 30, 2007                                                  |  | $           | 6,051 |                          | $ | 5,529            |  | $ | 18,157                                     |   |  | $                   | (1,265 | ) |       |   |       |   |  | $ | 28,472 |  
|                                                                        |  |             |       |                          |   |                  |  |   |                                            |   |  |                     |        |   |       |   |       |   |  |   |        |  

See accompanying notes to consolidated financial statements.



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##### Table of Contents

BOE FINANCIAL SERVICES OF VIRGINIA, INC.

Notes to Consolidated Financial Statements

(Unaudited)

1. The accounting and reporting policies of BOE Financial
Services of Virginia, Inc. (the Company) conform to accounting principles generally accepted in the United States of America and to the general practices within the banking industry. The interim financial statements have not been
audited; however, in the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the consolidated financial statements have been included. Operating results for the three and six
month periods ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007.

These financial statements should be read in conjunction with the financial statements and the footnotes included in the Companys 2006 Annual Report to Shareholders. Certain reclassifications have been made to
prior period balances to conform to the current period presentation.

2. Earnings per share are based on the weighted average number of common shares and
common stock equivalents outstanding during the applicable periods. Potential dilutive common stock had no material effect on income available to common shareholders. No shares were excluded from the calculation because the effect would be
anti-dilutive.



|                                 |  |                    |  |               |      |        |           |           |   |     
|-------------------------------- |  | ------------------ |  | ------------- | ---- | ------ | --------- | --------- | - | ----
|                                 |  | Six Months Ended  
|                                 |  | June 30, 2007      |  | June 30, 2006
|                                 |  | Shares             |  | Per Share     |      | Shares |           | Per Share
|Basic earnings per share         |  | 1,208,732          |  | $             | 1.14 |        | 1,199,776 |           | $ | 1.25
|Effect of dilutive stock options |  | 6,723              |  |               |      |        | 11,249    |           |   |     
|                                 |  |                    |  |               |      |        |           |           |   |     
|Diluted earnings per share       |  | 1,215,455          |  | $             | 1.13 |        | 1,211,025 |           | $ | 1.24
|                                 |  |                    |  |               |      |        |           |           |   |     
|                                 | 
|                                 |  | Three Months Ended
|                                 |  | June 30, 2007      |  | June 30, 2006
|                                 |  | Shares             |  | Per Share     |      | Shares |           | Per Share
|Basic earnings per share         |  | 1,209,266          |  | $             | 0.68 |        | 1,200,315 |           | $ | 0.64
|Effect of dilutive stock options |  | 6,356              |  |               |      |        | 10,091    |           |   |     
|                                 |  |                    |  |               |      |        |           |           |   |     
|Diluted earnings per share       |  | 1,215,622          |  | $             | 0.67 |        | 1,210,406 |           | $ | 0.63
|                                 |  |                    |  |               |      |        |           |           |   |     



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##### Table of Contents

3. Loans are shown on the balance sheets net of unearned discounts and the allowance for loan losses. Interest is
computed by methods which result in level rates of return on principal. Loans are charged off when in the opinion of management they are deemed to be uncollectable after taking into consideration such factors as the current financial condition of
the customer and the underlying collateral and guarantees. Loan fees and origination costs are deferred and the net amount amortized as an adjustment of the related loans yield using the level yield method. Bank of Essex (the Bank), a
wholly owned subsidiary of the Company, is amortizing these amounts over the contractual life of the related loans.



|                               |  |          |         |   |              |   |         |          |  |   |         |  
|------------------------------ |  | -------- | ------- | - | ------------ | - | ------- | -------- |  | - | ------- | -
|                               |  | June 30, |         |   | December 31, |   |         | June 30, | 
|(Dollars in thousands)         |  | 2007     |         |   | 2006         |   |         | 2006     | 
|Loans:                         |  |          |         |   |              |   |         |          |  |   |         |  
|Commercial                     |  | $        | 23,410  |   |              | $ | 22,934  |          |  | $ | 22,672  |  
|Real Estate                    |  |          | 144,602 |   |              |   | 138,008 |          |  |   | 128,318 |  
|Real Estate - construction     |  |          | 31,978  |   |              |   | 29,984  |          |  |   | 31,185  |  
|Installment & other loans      |  |          | 6,448   |   |              |   | 5,965   |          |  |   | 6,351   |  
|                               |  |          |         |   |              |   |         |          |  |   |         |  
|Total loans                    |  |          | 206,438 |   |              |   | 196,891 |          |  |   | 188,526 |  
|Less allowance for loan losses |  |          | (2,362  | ) |              |   | (2,400  | )        |  |   | (2,388  | )
|                               |  |          |         |   |              |   |         |          |  |   |         |  
|Net loans                      |  | $        | 204,076 |   |              | $ | 194,491 |          |  | $ | 186,138 |  
|                               |  |          |         |   |              |   |         |          |  |   |         |  

4. The Companys allowance for loan losses was as follows at the dates indicated:



|                                 |  |          |       |   |              |   |       |          |  |   |       |  
|-------------------------------- |  | -------- | ----- | - | ------------ | - | ----- | -------- |  | - | ----- | -
|                                 |  | June 30, |       |   | December 31, |   |       | June 30, | 
|(Dollars in thousands)           |  | 2007     |       |   | 2006         |   |       | 2006     | 
|Balance January 1                |  | $        | 2,400 |   |              | $ | 2,249 |          |  | $ | 2,249 |  
|Provision charged against income |  |          |      |   |              |   | 125   |          |  |   | 125   |  
|Recoveries of loans charged off  |  |          | 18    |   |              |   | 164   |          |  |   | 63    |  
|Loans charged off                |  |          | (56   | ) |              |   | (138  | )        |  |   | (49   | )
|                                 |  |          |       |   |              |   |       |          |  |   |       |  
|Balance at end of period         |  | $        | 2,362 |   |              | $ | 2,400 |          |  | $ | 2,388 |  
|                                 |  |          |       |   |              |   |       |          |  |   |       |  

5. Defined Benefit Pension Plan

Components of Net Periodic Benefit Cost



|                                             |  |                  |      |   |                    |   |      |      |  |   |      |   |  |   |     |  
|-------------------------------------------- |  | ---------------- | ---- | - | ------------------ | - | ---- | ---- |  | - | ---- | - |  | - | --- | -
|                                             |  | Pension Benefits |     
|                                             |  | Six Months Ended |      |   | Three Months Ended |  
|                                             |  | June 30,         |      |   | June 30,           |  
|(In Thousands)                               |  | 2007             |      |   | 2006               |   |      | 2007 |  |   | 2006 |  
|Service cost                                 |  | $                | 164  |   |                    | $ | 182  |      |  |   | 82   |   |  | $ | 91  |  
|Interest cost                                |  |                  | 136  |   |                    |   | 122  |      |  |   | 68   |   |  |   | 61  |  
|Expected return on plan assets               |  |                  | (146 | ) |                    |   | (130 | )    |  |   | (73  | ) |  |   | (65 | )
|Amortization of prior service cost           |  |                  | 2    |   |                    |   | 2    |      |  |   | 1    |   |  |   | 1   |  
|Amortization of net obligation at transition |  |                  | (2   | ) |                    |   | (2   | )    |  |   | (1   | ) |  |   | (1  | )
|Amortization of net loss                     |  |                  | 18   |   |                    |   | 28   |      |  |   | 9    |   |  |   | 14  |  
|                                             |  |                  |      |   |                    |   |      |      |  |   |      |   |  |   |     |  
|Net periodic benefit cost                    |  | $                | 172  |   |                    | $ | 202  |      |  | $ | 86   |   |  | $ | 101 |  
|                                             |  |                  |      |   |                    |   |      |      |  |   |      |   |  |   |     |  



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Employer Contributions

The
Company previously disclosed in its financial statements for the year ended December 31, 2006, that it expected not to contribute to its pension plan in 2007. As of June 30, 2007, no contributions have been made.

6. Stock Option Plans

During the fiscal year ended
December 31, 2000, the Company adopted stock option plans for all employees and outside directors. The plans provide that 110,000 shares of the Companys common stock will be reserved for both incentive and non-statutory stock options to
purchase common stock of the Company. The exercise price per share for incentive and non-statutory stock options shall not be less than the fair market value of a share of common stock on the date of grant, and may be exercised at such times as may
be specified by the Board of Directors in the participants stock option agreement. Each incentive and non-statutory stock option shall expire not more than ten years from the date the option is granted. The options vest at the rate of one
quarter per year from the grant date.

A summary of the status of the stock option plan activity for the six months ended June 30,
2007 is summarized below:



|                                               |  |                |   |  |                              |       |                                         |            |                         |        
|---------------------------------------------- |  | -------------- | - |  | ---------------------------- | ----- | --------------------------------------- | ---------- | ----------------------- | -------
|                                               |  | NumberofShares |   |  | WeightedAverageExercisePrice |       | WeightedAverageRemainingContractualTerm |            | AggregateIntrinsicValue
|Outstanding, January 1, 2007                   |  | 29,718         |   |  | $                            | 23.92 |                                         |            |                         |        
|Exercised (during quarter ended June 30, 2007) |  | (359           | ) |  |                              | 28.70 |                                         |            |                         |        
|                                               |  |                |   |  |                              |       |                                         |            |                         |        
|Outstanding, June 30, 2007                     |  | 29,359         |   |  |                              | 23.86 |                                         | 6.00 years |                         | 147,924
|                                               |  |                |   |  |                              |       |                                         |            |                         |        
|Exercisable, June 30, 2007                     |  | 29,359         |   |  |                              | 23.86 |                                         | 6.00 years |                         | 147,924
|                                               |  |                |   |  |                              |       |                                         |            |                         |        

The aggregate intrinsic value of a stock option in the table above represents the total pre-tax
intrinsic value (the amount by which the current market value of the underlying stock exceeds the option price of the option) that would have been received by the option holders had all option holders exercised their options on June 30, 2007.
This amount changes based on changes in the market value of the Companys stock.

The total intrinsic value of options exercised during the quarter
ended June 30, 2007 was $380 and for the six months ended June 30, 2007 was $878.

No stock-based compensation expense was recorded for the
quarter ended and six months ended June 30, 2007 or 2006 as no options were granted and all outstanding options were fully vested.



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##### Table of Contents

7. Securities

The
unrealized losses in the investment portfolio as of June 30, 2007 are generally a result of market fluctuations that occur daily. The unrealized losses are from securities that are all of investment grade, backed by insurance, U.S. government
agency guarantees, or the full faith and credit of local municipalities throughout the United States. The Company has the ability and intent to hold these securities to maturity. Market prices are affected by conditions beyond the control of the
Company. Investment decisions are made by the management group of the Company and reflect the overall liquidity and strategic asset/liability objectives of the Company. Management analyzes the securities portfolio frequently and manages the
portfolio to provide an overall positive impact to the Companys income statement and balance sheet.



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##### Table of Contents

|Item 2.     | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------------ | -------------------------------------------------------------------------------------

General

The Companys financial statements are prepared in accordance with accounting
principles generally accepted in the United States (GAAP). The financial information contained within the statements is, to a significant extent, financial information that is based on measures of the financial effects of transactions and events
that have already occurred. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset or relieving a liability. The Company uses historical loss factors as one
factor in determining the inherent loss that may be present in its loan portfolio. Actual losses could differ significantly from the historical factors that the Company uses. In addition, GAAP itself may change from one previously acceptable method
to another method. Although the economics of the Companys transactions would be the same, the timing of events that would impact its transactions could change.

Forward-Looking Statements

Certain statements contained in this report that are not historical facts
are forward-looking statements that are subject to certain risks and uncertainties. When used herein, the terms anticipates, plans, expects, believes and similar expressions as they relate to the
Company or its management are intended to identify such forward-looking statements. The Companys actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements.

CRITICAL ACCOUNTING POLICIES

Allowance for Loan Losses

The allowance for loan losses is an estimate of the losses that may be sustained in the Companys loan portfolio. The allowance is
based on two basic principles of accounting: (i) SFAS 5, Accounting for Contingencies,which requires that losses be accrued when they are probable of occurring and estimatable and (ii) SFAS 114, Accounting by Creditors for
Impairment of a Loan,which requires that losses be accrued based on the differences between the value of collateral, present value of future cash flows or values that are observable in the secondary market and the loan balance. The use of these
values is inherently subjective and actual losses could be greater or less than the estimates.

The allowance for loan losses is increased
by charges to income and decreased by charge-offs (net of recoveries). Managements periodic evaluation of the adequacy of the allowance is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that
may affect the borrowers ability to repay, the estimated value of any underlying collateral, and current economic conditions.

The
following discussion is intended to assist readers in understanding and evaluating the financial condition and results of operations of the Company and the Bank. This section should be read in conjunction with the Companys consolidated
financial statements and accompanying notes included elsewhere in this report.

Overview

On June 30, 2007 the Company had total assets of $284.704 million, an increase of $3.326 million, or 1.18% from $281.378 million at December 31,
2006. Total assets at June 30, 2006 were $270.632 million. The June 30, 2007 total assets figure represents an increase of 5.20%, or $14.072 million over one year ago. Total loans amounted to $206.438 million on June 30, 2007, an
increase of $9.547 million, or 4.85%, over December 31, 2006 total loans of $196.891 million. The June 30, 2007 figure represents an increase of $17.912 million, or 9.50% over total loans of $188.526 million on June 30, 2006. The
Companys available-for-sale securities



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##### Table of Contents

portfolio decreased $5.282 million, or 9.44%, from $55.963 million at December 31, 2006 to $50.681 million at June 30, 2007. Total
available-for-sale securities were $52.679 million on June 30, 2006. The Company had federal funds sold of $258,000 on June 30, 2007, federal funds purchased of $3.207 million on December 31, 2006 and federal funds purchased of $2.708
million on June 30, 2006.

The Company is required to account for the effect of market changes in the value of securities
available-for-sale (AFS) under SFAS 115. The market value of the June 30, 2007 securities AFS portfolio was $50.681 million compared to a book value $51.555 million. At December 31, 2006 market value of the available-for-sale portfolio was
$55.963 compared to a book value of $56.018 million. On June 30, 2006 the market value of the available-for-sale portfolio was $52.679 million with an associated book value of $53.701 million. The impact of the change in market value of AFS
securities, net of deferred income taxes, is reflected in the Statement of Changes in Stockholders Equity under Accumulated Other Comprehensive Income.

Total deposits at June 30, 2007 were $232.256 million. This $1.391 million increase is 0.60% greater than total deposits of $230.865 million at December 31, 2006 and $8.660 million, or 3.87% greater than
total deposits of $223.596 million at June 30, 2006.

Stockholders equity at June 30, 2007 was $28.472 million and
represented 10.00% of total assets. Stockholders equity was $28.047 million, or 9.97% of total assets at December 31, 2006 and $26.996 million, or 9.98% of total assets at June 30, 2006.

Results of Operations

Net Income

Net income was $820,000 for the second quarter of 2007, or $0.67 per diluted share. This compares to net income of $766,000, or $0.63 per diluted share in
the second quarter of 2006. The increase in earnings in the second quarter of 2007 compared to 2006 was $54,000, or 7.05%.

This increase
in quarterly earnings was primarily attributable to an $82,000 increase in noninterest income and a $58,000 reduction in income tax expenses. Additionally, as a result of continued intensive asset quality management, provision for loan losses was $0
in the second quarter of 2007 compared to $25,000 for the same period in 2006. Noninterest income was $559,000 in the second quarter of 2007 compared to $477,000 in the same period in 2006. Of this increase $115,000 was the result of additional
income generated through Bank Owned Life Insurance, which has contributed to lowering the 2007 income tax expense. Additionally, net interest income increased $17,000 in the second quarter of 2007 compared to 2006. Offsetting these increases to net
income was a $128,000, or 6.31%, increase in noninterest expenses.

For the six month period ended June 30, 2007, the Company reported
a 8.78%, or $132,000, decrease in net income over the same period in 2006. Net income for the six months ended June 30, 2007 was $1.372 million compared to six month earnings of $1.504 million in 2006. This decrease was primarily the result of
a $389,000, or 10.09%, increase in noninterest expenses and a 2.47%, or $125,000, decrease in net interest income. Noninterest expenses were $4.244 million for the first six months of 2007 compared to $3.855 million for the same period in 2006. Of
this increase to noninterest expenses $226,000 is related to increases in salaries and employee benefits. Bank of Essex filled staffing needs in the second quarter of 2007 for two new offices that will open in Northumberland County, Virginia.
Additionally, occupancy expenses have increased $77,000, or 17.66%, primarily as a result of the Companys Corporate Headquarters and branch banking facility that opened in June 2006.



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Net Interest Income

The Companys results of operations are significantly affected by its ability to manage effectively the interest rate sensitivity and maturity of its interest-earning assets and interest-bearing liabilities. At June 30, 2007, the
Company's interest-earning assets exceeded its interest-bearing liabilities by approximately $36.576 million, compared with a $28.254 million excess one year ago. Net interest margins on a fully tax equivalent basis were 3.94% through June 30,
2007 compared to 4.28% through June 30, 2006. The decrease in net interest margin was the result of an increase of 37 basis points in yield on total earning assets coupled with an increase of 71 basis points in the cost of total sources of
funds. The Companys yield on average earning assets, on a fully tax equivalent and annualized basis, was 7.09% for the first six months of 2007 compared to 6.72% for the first six months of 2006. Total cost of funds was 3.15% for the first six
months of 2007 compared to 2.44% for the same period in 2006.

The Companys loan-to-deposit ratio was 86.45%, on average, through the
first six months of 2007 compared to 84.44% for the same period in 2006. On June 30, 2007, the Companys loan-to-deposit ratio was 88.88% compared to 85.28% on December 31, 2006 and 84.32% on June 30, 2006.

Provision for Loan Losses

The Companys provision for
loan losses decreased $25,000 to $0 for the second quarter of 2007 compared to $25,000 in the second quarter of 2006. Net charge-offs of $43,000 in the second quarter of 2007 compared to net charge-offs on loans of $17,000 in the second quarter of
2006. For the six month period ended June 30, 2007, provision for loan losses was $0, a decrease of 125,000, from provision for loan losses of $125,000 through six months in 2006. Through six months in 2007 net charge-offs were $38,000,
represented by charge-offs of $56,000 and recoveries of $18,000.

Noninterest Income

Noninterest income, including net gains and losses on securities, was $559,000 in the second quarter of 2007 compared to $477,000 in the same period of
2006. This represents an increase of 17.19%, or $82,000. Service charges on deposit accounts were $278,000 in the second quarter of 2007 and $274,000 in the second quarter of 2006. This is an increase of 1.46%, or $4,000. Securities losses were
$3,000 in the second quarter of 2007 and 2,000 for the same period in 2006. All other noninterest income increased 84.03% or $100,000, from $119,000 in the second quarter of 2006 to $219,000 in the second quarter of 2007. Other fee income increased
10.71%, or $6,000, from $56,000 in the second quarter of 2006 to $62,000 in the second quarter of 2007. Gains on sale of loans decreased $23,000, or 88.46%, from $26,000 in the second quarter of 2006 to $3,000 in the second quarter of 2007.

For the six month period ended June 30, 2007 noninterest income of $989,000 was an increase of $120,000, or 13.81%, from noninterest
income of $869,000 for the first six months of 2006. Service charges on deposit accounts were $513,000 for the period compared to $522,000 in 2006. This is a decrease 1.72%, or $9,000. All other noninterest increased $128,000, or 54.70% and was
$362,000 for the first six months of 2007 compared to $234,000 for the same period in 2006. Gains on sales of loans was $3,000 for the first six months of 2007 compared to $33,000 for the same period in 2006, representing a decrease of 90.91%, or
$30,000. Other fee income increased 15.15%, or $15,000, and was $114,000 for the first six months of 2007 compared to $99,000 for the same period in 2006. Securities losses decreased $16,000, or 84.21%, and were a loss of $3,000 in the first six
months of 2007 compared to a loss of $19,000 for the first six months of 2006.

Noninterest Expenses

Noninterest expenses were $2.156 million and increased $128,000, or 6.31%, in the second quarter of 2007 compared to 2006. Other expenses decreased,
$8,000, from $651,000 in the second quarter of 2006 to $643,000 in the second quarter of 2007. Salaries



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and employee benefits increased $109,000, or 9.85%, from $1.107 million in the second quarter of 2006 to $1.216 million in the second quarter of 2007.
Premises and fixed assets increased $27,000, or 10.00%, from $270,000 in the second quarter of 2006 to $297,000 in the second quarter of 2007.

For the six month period ended June 30, 2007 noninterest expenses were $4.244 million, a $389,000, or 10.09%, increase over noninterest expenses of $3.855 million for the first six months of 2006. Salaries and employee benefits
increased $226,000, or 10.41%, and were $2.397 million for the first six months of 2007 compared to $2.171 million for the same period in 2006. Premises and fixed assets increased $86,000, or 17.66% and were $573,000 for the first two quarters of
2007 and $487,000 for the same period in 2006. Other expenses increased $77,000, or 6.43%, from $1,197,000 for the first six months of 2006 compared to $1,274,000 for the same period in 2006.

Income Taxes

Income tax expense was $153,000 in the second
quarter of 2007. This represents a decrease of $58,000 compared to $211,000 of income tax expense in the second quarter of 2006. Income tax expense for the six month period ended June 30, 2007 was $300,000 compared to $437,000 for the same
period in 2006. This represents a decrease of $137,000 and is primarily the result of a lower effective tax rate due to the addition of $5.500 million in Bank Owned Life Insurance and tax exempt municipal income.

Asset Quality

The Companys allowance for loan losses
totaled $2.362 million on June 30, 2007, or 1.14% of total loans. On December 31, 2006, the allowance for loan losses totaled $2.400 million and was 1.23% of total loans. On June 30, 2006, the allowance for credit losses was $2.388
million and was 1.27% of total loans.

On June 30, 2007, the Company had nonaccruing assets of $191,000 compared to $54,000 on
June 30, 2006. Loans past due and still accruing interest totaled $56,000 on June 30, 2007 compared to $928,000 on June 30, 2006.

As a result of continued intensive asset quality management and improved asset quality, provision for loan losses was $0 in the second quarter of 2007 compared to $25,000 in the same period in 2006.

Capital Requirements

The determination of capital adequacy
depends upon a number of factors, such as asset quality, liquidity, earnings, growth trends and economic conditions. The Company seeks to maintain a strong capital base to support its growth and expansion plans, provide stability to current
operations and promote public confidence in the Company.

The federal banking regulators have defined three tests for assessing the capital
strength and adequacy of banks, based on two definitions of capital. Tier 1 Capital is defined as a combination of common and qualifying preferred stockholders equity less goodwill. Tier 2 Capital is defined as
qualifying subordinated debt and a portion of the allowance for loan losses. Total Capital is defined as Tier 1 Capital plus Tier 2 Capital.

Three risk-based capital ratios are computed using the above capital definitions, total assets and risk-weighted assets and are measured against regulatory minimums to ascertain adequacy. All assets and off-balance
sheet risk items are grouped into categories according to degree of risk and assigned a risk-weighting and the resulting total is risk-weighted assets. Tier 1 Risk-based Capital is Tier 1 Capital divided by risk-weighted assets.
Total Risk-based Capital is Total Capital divided by risk-weighted assets. The Leverage ratio is Tier 1 Capital divided by total average assets.



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The Companys ratio of total capital to risk-weighted assets was 16.30%% on June 30, 2007
compared to 13.64% on June 30, 2006. Its ratio of Tier 1 Capital to risk-weighted assets was 15.40% on June 30, 2007 and 12.71% on June 30, 2006. The Companys leverage ratio (Tier I capital to average adjusted total assets) was
11.85% on June 30, 2007 and 10.00% on June 30, 2006. These ratios exceed regulatory minimums. The Company issued trust preferred subordinated debt that qualifies as regulatory capital in the fourth quarter of 2003. This trust preferred
debt has a 30-year maturity with a 5-year call option and was issued at a rate of three month LIBOR plus 3.00% and was priced at 8.34938% in the second quarter of 2007.

LIQUIDITY

Liquidity represents the Companys ability to meet present and future financial obligations
through either the sale or maturity of existing assets or the acquisition of additional funds through liability management. Liquid assets include cash, interest-bearing deposits with banks, federal funds sold, and certain investment securities. As a
result of the Companys management of liquid assets and the ability to generate liquidity through liability funding, management believes that the Company maintains overall liquidity sufficient to satisfy its depositors requirements and
meet its customers credit needs.

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CREDIT RISK AND CONTRACTUAL OBLIGATIONS

The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its clients and
to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in
excess of the amount recognized in the balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement the Bank has in particular classes of financial instruments.

The Banks exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit
and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the
Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements but may change current practice for some entities. SFAS 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007 and interim periods within those years. The Company does not expect the implementation of SFAS 157 to have a material impact on its consolidated financial statements.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities (SFAS 159). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of SFAS 159 is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The fair value option established by SFAS 159 permits all entities to
choose to measure eligible items at fair value at specified election dates. A business entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. The fair
value option may be applied instrument by instrument and is irrevocable. SFAS 159 is effective as of the beginning of an entitys first fiscal year that begins after November 15, 2007. The Company is in the process of evaluating the impact
SFAS 159 may have on its consolidated financial statements.



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|Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

Market
risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, exchange rates and equity prices. The Companys market risk is composed primarily of interest rate risk. The
Companys Asset and Liability Management Committee (ALCO) is responsible for reviewing the interest rate sensitivity position and establishing policies to monitor and limit exposure to this risk. The Board of Directors reviews and approves the
guidelines established by ALCO.

Earnings Simulation Analysis

Interest rate risk is monitored through the use of two complimentary modeling tools: earnings simulation modeling and economic value simulation (net present value estimation). Each of these models measure changes in a variety of interest
rate scenarios. While each of the interest rate risk measures has limitations, taken together they represent a reasonably comprehensive view of the magnitude of interest rate risk in the Company, the distribution of risk along the yield curve, the
level of risk through time, and the amount of exposure to changes in certain interest rate relationships. Earnings simulation and economic value models, which more effectively measure the cash flow and optionality impacts, are utilized by management
on a regular basis and are explained below.

Earnings Simulation Analysis

Management uses simulation analysis to measure the sensitivity of net interest income to changes in interest rates. The model calculates an earnings estimate based on current and projected balances and rates. This
method is subject to the accuracy of the assumptions that management has input, but it provides a better analysis of the sensitivity of earnings to changes in interest rates than other potential analyses.

Assumptions used in the model are derived from historical trends and managements outlook and include loan and deposit growth rates and projected yields and rates.
Such assumptions are monitored and periodically adjusted as appropriate. All maturities, calls and prepayments in the securities portfolio are assumed to be reinvested in like instruments. Mortgage loans and mortgage backed securities prepayment
assumptions are based on industry estimates of prepayment speeds for portfolios with similar coupon ranges and seasoning. Different interest rate scenarios and yield curves are used to measure the sensitivity of earnings to changing interest rates.
Interest rates on different asset and liability accounts move differently when the prime rate changes and are reflected in the different rate scenarios.

The Company uses its simulation model to estimate earnings in rate environments where rates ramp up or down around a most likely rate scenario, based on implied forward rates. The analysis assesses the impact on net interest
income over a 12 month time horizon by applying 12-month shock versus the implied forward rates of 200 basis points up and down. The following table represents the interest rate sensitivity on net interest income for the Company across the rate
paths modeled as of June 30, 2007:



|                          |  |                               |   |  |                  |      |  
|------------------------- |  | ----------------------------- | - |  | ---------------- | ---- | -
|                          |  | Change in Net Interest Income |  
|Change in Yield Curve     |  | (Percent)                     |   |  | ($ in thousands) |     
|+200 basis points         |  | -1.56                         | % |  | $                | (179 | )
|Most likely rate scenario |  | 0.00                          | % |  |                  |     |  
|-200 basis points         |  | 0.48                          | % |  |                  | 55   |  



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Economic Value Simulation

Economic value simulation is used to determine the estimated fair value of assets and liabilities over different interest rate scenarios. Economic values are calculated based on discounted cash flow analysis. The net
economic value of equity is the economic value of all assets minus the economic value of all liabilities. The change in net economic value over different rate scenarios is an indication of the longer term earnings sensitivity capability of the
balance sheet. The same assumptions are used in the economic value simulation as in the earnings simulation. The economic value simulation uses simultaneous rate shocks to the balance sheet, whereas the earnings simulation uses rate schock over 12
months. The following chart reflects the estimated change in net economic value over different rate environments using economic value simulation as of June 30, 2007:



|                          |  |                                    |   |  |                  |       
|------------------------- |  | ---------------------------------- | - |  | ---------------- | ------
|                          |  | Change in Economic Value of Equity
|Change in Yield Curve     |  | (Percent)                          |   |  | ($ in thousands)
|+200 basis points         |  | -17.92                             | % |  | $                | -6,586
|Most likely rate scenario |  | 0.00                               | % |  |                  |      
|-200 basis points         |  | 13.38                              | % |  |                  | 4,916 



|Item 4. | Controls and Procedures
|------- | -----------------------

Based on their most recent
review, which was completed as of the last day of the period covered by this report, the Companys principal executive officer and principal financial officer have concluded that the Companys disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Companys in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Companys management,
including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure and are effective to ensure that such information is recorded, processed, summarized and reported
within the time periods specified in the SECs rules and forms. There were no significant changes in the Corporations internal controls or in other factors that could significantly affect those controls subsequent to the date of their
evaluation.

The Companys management is also responsible for establishing and maintaining adequate internal control over financial
reporting. There were no changes in the Companys internal control over financial reporting identified in connection with the evaluation of it that occurred during the Companys last fiscal quarter that materially affected, or are
reasonably likely to materially affect, internal control over financial reporting.



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##### Table of Contents

PART II - OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

None



|Item 1A. | Risk Factors
|-------- | ------------

No changes in risk factors discussed
in the Companys Annual Report on Form 10-K for the year ended December 31, 2006.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

None



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

The Company held its annual shareholders meeting on May 11, 2007.

R. Harding Ball, George B. Elliott, and George M. Longest, Jr., all of the
directors nominated for election, were elected to the Board of Directors of the Company to serve until the Annual Meeting to be held in 2010 and until their successors are duly elected. The names of the other directors whose terms of office as
directors continued after the annual shareholders meeting are: R. Tyler Bland, III; L. McCauley Chenault; Alexander F. Dillard, Jr.; Frances H. Ellis; Page Emerson Hughes, Jr.; and Philip T. Minor.

Votes were cast in the election of directors as follows:



|                       |  |         |  |         |  |        
|---------------------- |  | ------- |  | ------- |  | -------
|                       |  | FOR     |  | AGAINST |  | ABSTAIN
|R. Harding Ball        |  | 947,780 |  | 9,791   |  | 0      
|George B. Elliott      |  | 948,692 |  | 8,879   |  | 0      
|George M. Longest, Jr. |  | 926,097 |  | 31,474  |  | 0      

Yount, Hyde & Barbour, P.C., Certified Public Accountants, were ratified as the independent auditors of
the Company for 2007.

| |  |         |  |         |  |        
| |  | ------- |  | ------- |  | -------
| |  |         | 
| |  | FOR     |  | AGAINST |  | ABSTAIN
| |  | 957,554 |  | 0       |  | 0      



|Item 5. | Other Information
|------- | -----------------

None



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|Item 6. | Exhibits
|------- | --------

The information furnished herein,
including Exhibit 99.1, shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.



| | (a) | Exhibit Listing
| | --- | ---------------



|              |  |                                                                                                                                                                                                                                                                                   
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                       
|2             |  | Agreement and Plan of Reorganization (the "Reorganization Agreement") dated as of March 20, 2000 between the Corporation and Bank. (Exhibit A of the Proxy Statement included in Form S-4
Registration Statement (No. 333-33260) filed March 24, 2000, incorporated by reference).
|              | 
|3(a)          |  | Articles of Incorporation of the Corporation (Appendix 1 to Exhibit A of the Proxy Statement included in Form S-4 Registration Statement (No. 333-33260) filed March 24, 2000, incorporated by
reference).                                                                        
|              | 
|3(b)          |  | Bylaws (Appendix 2 to Exhibit A of the Proxy Statement included in Form S-4 Registration Statement (No. 333-33260) filed March 24, 2000, incorporated by reference).                                                                                                              
|              | 
|10(a)         |  | The Corporation's Stock Incentive Plan (Appendix 3 to Exhibit A of the Proxy Statement included in Form S-4 Registration Statement (No. 333-33260) filed March 24, 2000, incorporated by
reference).                                                                              
|              | 
|10(b)         |  | First Amendment to the Corporation's Stock Incentive Plan (Exhibit 99(b) to Form S-8 Registration Statement (No. 333-49538) filed November 8, 2000, incorporated by reference).                                                                                                   
|              | 
|10(c)         |  | The Corporation's Stock Option Plan for Outside Directors (Appendix 4 to Exhibit A of the Proxy Statement included in Form S-4 Registration Statement (No. 333-33260) filed March 24, 2000,
incorporated by reference).                                                           
|              | 
|10(d)         |  | First Amendment to the Corporation's Stock Option Plan for Outside Directors (Exhibit 99(d) to Form S-8 Registration Statement (No. 333-49538) filed November 8, 2000, incorporated by reference).                                                                                
|              | 
|31.1          |  | Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act.                                                                                                                                                                             
|              | 
|31.2          |  | Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act                                                                                                                                                                              
|              | 
|32            |  | Certification of Chief Executive Officer and Chief Financial Officer.                                                                                                                                                                                                             
|              | 
|99.1          |  | BOE Financial Services Dividend Reinvestment Plan (Incorporated by reference to the Registrants Registration Statement on Form S-3D filed November 8, 2000)                                                                                                                      



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Signatures

In accordance with the requirements of the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.



|                                                      |  |  |  |     |  |                                                    
|----------------------------------------------------- |  |  |  | --- |  | ---------------------------------------------------
|BOE Financial Services of Virginia, Inc. (Registrant)
|                                                      |  |  | 
|8/14/07                                               |  |  |  | By: |  | /s/ George M. Longest, Jr.                         
|(Date)                                                |  |  |  |     |  | (Signature)                                        
|                                                      |  |  |  |     |  | George M. Longest, Jr.                             
|                                                      |  |  |  |     |  | President and Chief Executive Officer              
|                                                      |  |  | 
|8/14/07                                               |  |  |  | By: |  | /s/ Bruce E. Thomas                                
|(Date)                                                |  |  |  |     |  | (Signature)                                        
|                                                      |  |  |  |     |  | Bruce E. Thomas                                    
|                                                      |  |  |  |     |  | Secretary, Vice President & Chief Financial Officer



19